The Week Ahead: Barron's Roundtable&mdash;Too Cautious Like 2013?

In his review of the first part of Barron's Annual Roundtable, MoneyShow's
Tom Aspray tends to focus on how they view the economy and stock market;
here, he highlights why the 2013 Roundtable has turned out to be quite an interesting
comparison to this year's panel.

The stock market got another monkey off its back last week as the ECB finally
came through with a plan for quantitative easing that was slightly larger than
the market expected. Stocks had already been rebounding ahead of this news and
subsequently accelerated to the upside. This is despite the fact that no one
can know yet if their plan will even succeed.

Every January, Barron's has their Annual Roundtable panel where they assemble
ten well known investment experts and get their thoughts for the year ahead.
The first part was published
last weekend and I always find it an interesting read.

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Though I have no affiliation with Barron's, I continue to recommend that all
serious investors should be subscribers or at least check out the Roundtable
issue at their local library.

As I discussed two weeks ago (Another Double Digit Year?), my technical appraisal of the stock market suggested
that the S&P 500 could reach 2263 sometime in 2015 (a 10% gain). But I have
consistently stressed that forecasting a year out is a fool's game.

I feel much more confident forecasting 3-6 months out and next fall I should
have a better idea how the stock market will finish 2015. In October, when the
sentiment was getting more bearish, I made the case (Is
This the Beginning of the End?) why investors then should not yet be worried
about a bear market or new recession.

Though I find the individual recommendations of the Roundtable experts interesting,
I tend to focus on how they view the economy and the stock market. This year,
Barron's summed up by saying "On the whole, they expect interest rates
to stay unnaturally low and the US to lead the world in economic growth. Yet,
they doubt that will translate into robust gains for the stock market."

In fact, the most bullish was Delphi Management's Scott Black who was expecting
"that the Standard & Poor's 500 will return 10% this year-an 8% price
advance and a 2% dividend yield." Even those who think the lower crude
oil prices will be a positive for consumers and the economy were not expecting
strong market gains.

Most do expect that interest rates, along with inflation, will remain low and
they generally do not expect a US GDP growth of much more than 2-2.5%. I think
the economy is likely to do much better in 2015.

In a review of previous roundtable discussions, I found the Roundtable
of 2013 to be quite an interesting comparison. There was quite a split in
the opinions in 2013, but even the most positive analysts were not looking for
more than a 10% gain.

Many were quite bearish as Barron's commented then "Best we can summarize
it, they fell into two distinct camps-those who foresee an improving economy,
quiescent inflation, rising corporate earnings, and decent gains for stocks-and
those who expect the interest-rate-suppressing policies of the Federal Reserve
and 37 similar institutions to end in recession, depression, and 'national confrontation,'
otherwise known as war."

Of course, stocks had one of the best years since 1997 in 2013 as the S&P
500 gained over 32%. Of course, many of the experts' individual stock picks
did quite well in 2013, but the very bearish forecasts on the markets clearly
did not work out.

The stock market had one main thing in common technically at the start of both
2013 and 2015. On December 12, 2012, the NYSE A/D line made a new high and December
29, 2014, the A/D line also made another new high. It is again acting stronger
than prices as we head into 2015, just as it did in early 2013.

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Since the start of 2014, global markets have been nervous about the ECB meeting
last Thursday, so some will be surprised to see that the German Dax Index had
already closed at a new high on January 16, breaking through the resistance
at line a. The completion of the trading range (lines a and b) projects even
further gains for the DAX in the months ahead.

The broader STOXX Europe 600-that represents large, mid, and small capitalization
companies across 18 countries of the European region-has also broken through
the year-long resistance and also looks quite bullish.

NEXT PAGE: What to Watch

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There also has been some improvement in the economic outlook as the EuroZone
waits for the outcome of the Greek elections on Sunday January 25. The German
Purchasing Manger's Index rose to a three month high and the Markit EuroZone
PMI has turned up, as indicated in this chart from Markit.
A break of the downtrend I added, line a, in the 55-56 area, would be a positive
sign.

Some data on US manufacturing continues to suggest a slowdown, but last Friday's
flash PMI Manufacturing Index of 53.7 still indicates moderate growth as it
was just below the final reading from December of 53.8.

In last week's trading lesson Are the Homebuilders Still in a Bear Market?, I took a look at the disappointing
action of this industry group since the bear market low of 2009. The housing
data last week was quite good as both the Housing Starts and Existing Home Sales
were surprisingly strong. The home construction stocks are not yet responding
to this positive data.

This week, we get the S&P Case-Shiller HPI on Tuesday, along with New Home
Sales plus the Pending Home Sales Index on Thursday. This is just part of a
busy calendar, with Monday's PMI Services Index and Dallas Fed Manufacturing
Survey.

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On Tuesday, we also get Durable Goods, Consumer Confidence, and the Richmond
Manufacturing Survey. The focus, I believe, will be on Consumer Confidence in
light of the continuing decline in gas prices. The long-term chart (courtesy
of dhsort.com) shows that the downtrend I have added, line a, was broken in
early 2014. A move above the 100 level is not out of the question later this
year.

The FOMC Meeting begins on Tuesday with an announcement, but no press conference
on Wednesday. There are several important reports on Friday, including GDP,
Employment Cost Index, Chicago PMI, and the University of Michigan's month-end
reading on Consumer Sentiment.

What to Watch
I thought last week that the close on January 16 might be important and this
week's rally supports that view. The major averages had dropped below their
quarterly pivot levels but then rallied to close the week back above their pivots
(see
Pivot Table here). This was a strong enough sign that I recommended traders
buy the Spyder Trust (SPY)
on Friday
afternoon.

The strong close this week, which may be above the prior two week highs, supports
the bullish interpretation but further gains are needed in the next two weeks
to signal a breakout to the upside. The quarterly pivot levels and the recent
lows are now even a more important level of support.

The strong close this week will cause most of the weekly studies to turn higher.
As I have been noting, the fact that most of the weekly studies did confirm
the recent highs is a positive for the intermediate term.

The daily studies are slightly positive and it will take further gains before
turn they can turn strongly bullish. The healthcare sector looked strong as
we started last week, and in Three
Market Leading Healthcare Picks, I recommended stocks which showed up as
positive basis my weekly and monthly technical scans.

The sentiment picture improved some last week as the bullish % from AAII dropped
from 46.11% bullish to 37.14%. This is the lowest reading since October 2nd,
which was two weeks before that important low.

Also, now 30.79% are bearish so it looks like all those "impending bear
market" articles are having an effect. Remember it is a big
mistake to change your outlook based on any analyst (myself included) without
doing your own research.

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The 5-day MA of the % of S&P 500 stocks above
their 50-day MAs did turn up last week, closing last Thursday at 44.94%.
On January 20, it dropped to a low of 41.36%. Turning up from moderately oversold
levels is consistent with the end of the market's correction.

The daily chart of the NYSE Composite shows an apparent continuation, or flag
formation, lines a and b. The resistance is in the 10,960-80 area, so a
close back above the 11,000 would be an upside breakout.

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The monthly projected pivot resistance is at 11,111, which is just below the
September high. The 127.2% Fibonacci
retracement target from the formation is at 11,279 and just below the quarterly
pivot resistance at 11,309.

The week ending 1/16 the NYSE dropped below the quarterly pivot at 10,597 for
several days before closing the week 10,660. This is why using price based levels,
like the quarterly pivot levels, that are based on three months of prior data
can help you navigate
volatile markets.

The weekly NYSE
Advance/Decline made a new high at the end of 2014 and will close the week
near the old highs. This is evident from the daily A/D line, which is back to
resistance at line c. The A/D line is above its WMA, which is trying to turn
higher with long-term support at line d.

The McClellan
oscillator has now convincingly moved above the zero line and broken the
downtrend, line e, that connects the November and December highs. The Osc formed
a short-term positive divergence at the recent lows, line d.

The weekly on-balance
volume (OBV) made a significant new high at the end of 2014 but close the
week back above its WMA. With a strong close this week, it could reverse back
above its WMA.

The rising 20-day EMA is at 10,726, which represents first support.

NEXT PAGE: Stocks

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S&P 500
The Spyder Trust (SPY)
after the low of $198.55 on Friday, January 16, closed that day at $201.63 and
well above the quarterly pivot at $199.42. The high last week appears to be
just under $206 and a close above $206.50 should make those on the short side
even more nervous.

There is further resistance in the $209 area with the weekly starc-
band now at $217.26. The upper trend line (line a) is just below this level.
The 1st quarter projected pivot resistance is at $230.02 (courtesy
of John Person's software).

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The slightly rising 20-day EMA is at $203.26 with the 20-week EMA at $201.85.
There is more important weekly chart support at line b.

The weekly
on-balance volume (OBV) did make a new high late last year confirming the
price action. It has turned up but is still below its WMA. A higher close this
week should take the OBV back above its WMA. The initial weekly support at line
c, was broken in October but the OBV held well above the long-term OBV support
at line d.

The daily S&P 500 A/D line (not shown) has moved well above its WMA and
has broken its short-term downtrend.

Dow Industrials
The weekly chart of the SPDR Dow Industrials (DIA)
shows that it has dropped below the 20-week EMA each of the past three weeks
but closed well above the lows. The recent correction low of $172.12 was above
quarterly pivot $171.99.

The daily starc+
band now stands at $180.69, which is just below the all time high of $180.71.
The weekly starc+ band is significantly higher at $185.93

The weekly relative
performance determines whether the Dow is acting stronger or weaker than
the S&P 500. It is still in a long-term downtrend, line f, so it continues
to be weaker. The RS line is in a range and a move above the September highs
to signal that is getting stronger.

The Dow Industrials A/D line (not shown) held above the December lows and closed
the week above its WMA. It is now testing its downtrend.

Nasdaq 100
The PowerShares QQQ Trust (QQQ)
had a sharp rebound this week as it was one of the strongest major average as
it had closed back above the quarterly
pivot at $99.67 the prior week. The correction low was $99.36 with the uptrend
on the chart, line a, at $97.59.

The next resistance is at $105.25-$105.86 which is the upper boundary of the
recent trading range and the daily starc+ band. The November 2014 high was $106.24.
The monthly projected pivot resistance is at $108.76 with the weekly starc+
band at $109.12.

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The weekly relative performance will close the week back above its WMA, which
is a positive sign. This suggests that the Nasdaq 100 may again be ready to
assume leadership.

The weekly OBV did not confirm the November highs as indicated by line c. It
has turned up but is still well below its WMA. If QQQ
makes a new high, it will be important that the OBV also makes a new high.

The Nasdaq 100 A/D line (not shown) has moved back above its WMA and could
test the flattening WMA on a pullback.

Russell 2000
The iShares Russell 2000 Index (IWM)
has been in a narrow range for the past three weeks. It had a recent low of
$114.20 that was below the quarterly pivot at $114.73 but did not close below
it.

The weekly chart still shows a major trading range, lines e and f. The most
recent high at $121.41 was slightly above the prior two week highs but a strong
close above this level is needed to confirm a breakout.

A close back above the last week's high at $119.39 would be positive as it
would be above the prior two week highs. The weekly starc+ band is now at $126.05.
The weekly relative performance broke its downtrend, line g, in November but
has not yet completed its bottom formation as it has stayed in a trading range.

The weekly
OBV turned up this week but is still slightly below its WMA. It also shows
a trading range with key resistance at line h. The daily OBV is still below
its WMA as the volume on the recent rally has not been impressive.

The 20-day EMA and initial support is at $117.29 with further at $116.

NEXT PAGE: Sector Focus, Commodities, and Tom's Outlook

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Sector FocusThe iShares Dow Jones Transportation (IYT)
had strong gains last week though it was hit with profit taking on Friday. I
discussed the Transports in detail in last Wednesday's Are
the Transports Turning the Corner?

Though the closing data is not complete yet, it looks as though the weekly
studies did reverse back to positive last week.

Once again the Select Sector Utilities (XLU),
Select Sector Health Care (XLV),
and the Select Sector Consumer Staples (XLP)
led the market higher last week as all made new highs.

The Sector Select SPDR Industrials (XLI)
and the Sector Select SPDR Technology (XLK)
were higher but are still well below their recent highs.

The Select Sector Energy (XLE)
tried to rally a bit further last week, and surprisingly, the oil & gas
stocks were quite strong. It will be interesting to see how the stocks react
once we get more earnings.

The Select Sector Materials (XLB)
did not have a Friday close below the quarterly pivot on the most recent correction,
so the trend is still positive. It needs to close above the early December high
to turn positive.

The Sector Select SPDR Financial (XLF)
tried to rebound last week, but it is still below its flat 50- and 200-day MAs
as well as the quarterly pivot.

Crude Oil
The March crude oil contract bounced briefly in reaction to the death of the
Saudi king but closed the week down another 6%. The week of January 16, crude
oil formed a doji so a close above the doji at 51.73% is needed to trigger a
high
close doji buy signal.

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Precious Metals
The SPDR Gold Trust (GLD)
and Market Vectors Gold Miners (GDX)
had another strong week closing higher. GLD
is getting closer to its long-term downtrend as it has rallied back to the summer
lows. Volume in GLD
has been strong in the past three weeks.

GDX
seemed to lose a bit steam late in the week but still closed higher. There is
next strong resistance in the $24-$26. Given that both are well above support
does not favor chasing them at current levels.

The Week Ahead
The market was hit with profit taking on Friday as the selling picked up going
into the close. Still the major averages did close the week higher so this coming
week's close will be important.

A strong close would clearly shift the weight of the evidence to the bullish
side. It would take a close below last week's low to reverse the recent positives.
The weak close on Friday did spook some traders but the A/D numbers were not
that negative.

The long-term positives from the technical studies still suggest that we are
in the process of completing a correction. The strong reading from the Leading
Indicators last Friday are still signaling a healthy economy and it would take
many months for this key indicator to turn negative.

For traders, I would stay with longs in the Spyder Trust (SPY)
as the second buy level was hit at last week's low. Any changes will be posted
first on my Twitter feed.

I still no reason to change your portfolio as I think that despite the recent
volatility stocks are still the best place to be in 2015. Be sure to have a
plan and consider using the quarterly
pivot analysis to monitor your positions. Be sure to review your portfolio
and do your weekend homework.